I wanted to post the next installment in South Jersey Investing. I went over FLIPS in South Jersey, Central Jersey, New Jersey area. Now I want to touch on BUY AND HOLDS.
BUY AND HOLDS
When looking for a Buy and hold in South Jersey, Central Jersey, New jersey area you have two options. Turnkey and total rehabs. Rehabs are the more favored option but they are harder to find, mainly because of the competition for them. Built in equity is favorable. But there are more and more investors who don't have the time to do the work in a rehab and are just looking for a ready to go return on their money. So the turnkey is picking up. The typical returns you see are between 9% and 14%. The biggest hurdle to purchase these is the listing price. A good amount of the turnkeys are over priced, BUT I believe this to be just a mental block. I have found that if you just figure out the number that makes the property work for you and offer it you have more success than failure.
The average sized units that you see in the South Jersey Central Jersey area are between 2-5. They are mostly 1-2 bed 1bath set ups. The average rents you can get are between 900-1400 depending on the town. There are three markets to get into and each has it's own benefit. The first one is your low income blue collar, these towns are great for cash flow but not much in the way of appreciation. They have a lot of turn over but you can usually always fill them up. The 2nd market is your higher blue collar towns. They are your more constant tenant areas. They stay longer and set roots. The cash flow is less because taxes are higher, but there is some appreciation as well. The 3rd market is higher paid blue collar workers. These market are great for appreciation because the towns are very desirable, but your cash flow is usually close to nonexistent. The tenants are usually people transitioning between renting and buying so your turn over is high and you have a hard times finding tenants. The pay off at retirement can be worth it though.
Lets go through a typical transaction for a multi unit in NJ:
1. We Find the deal, either through an agent or wholesaler.
2. We go to see the property to see what the condition is and to see what the town is like. (You usually have time to do this on a turnkey, Rehab needs to be bought faster)
3. Now we put in your offer. Again when doing an offer the ways you can beat out the competition besides just being the highest is to offer to close quickly, 2 weeks is standard, or offer all cash, offer to have no contingencies (Inspections, Etc).
4. Once we get the property under contract you have two weeks usually to get everything done. From official quotes from you contractors to any inspections that you did want done. You also need to get a title agency to close the property. We also want to get copies of any leases of tenants, proof they have been paying, any Certificate of Occupancies, and also proof there is a security deposit. If you have an off market deal you still need to get a lawyer to draw up the contracts, a title agency to close the property and a conditional certificate of occupancy (depending on the town).
5. Now you close the property. You show up pay everything you are required and hope nothing was missed.
10. Your a new landlord. If there was rehab to be done you get that underway and then perform the property for top rents. If it was a turnkey you start making your money right away.
The thing to remember when investing in rentals in South Jersey, Central jersey, or New Jersey in general is to always stick to your numbers and to always ignore the list price and offer the price that works.
Let me know any questions you may have and if anyone has thought please add them in!
thanks I need that information. The information u gave is appreciate
thanks, that was helpful info. For central Jersey, where(what towns.townships) have you seen multifamilies in the middle range?
Hi @Takidia T jennings ,
I am glad you found the info helpful. Make sure to check out the other two I posted about the south jersey market. If you put in south jersey as a search you should be able to find them. I believe you can also see them on the side of my profile.
Hi @Louis Friedman ,
I'm glad the info helped you as well. Depending where you consider central jersey to start, But some towns I have been through that fit that middle range are Maple Shade, Delran, Mt Laurel, Mount Holly, Riverside, Wilingboro. There are more but those are the ones I have been through.
Let me know any other questions anybody might have,
William Lees Jr
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